Debt SIPs rise, equity SIPs fall

The MF industry has witnessed an increase in the number of SIP accounts even as the inflows through SIPs has dried up over the past two months i.e. July and August.

Total number of active SIP accounts increased to 3.31 crore in August as against 3.27 crore in July and 3.23 in June. Meanwhile, SIP inflows have slowed down to Rs 7,792 crore in August as against Rs 7,831 crore in July and Rs 7,917 crore in June, shows AMFI data.

Experts attribute the rise in number of accounts to online digital platforms that have cashed in on retail  interest in mutual funds. As a result, many accounts with smaller ticket size have entered the MF industry. On the other hand, many investors who were facing financial constraint due to coronavirus pandemic have paused their SIP contribution.

Jimmy Patel, CEO, Quantum MF said that many salaried and small-scale businessmen have paused their SIPs because they are facing financial constraint during the pandemic and the slowdown. And most of the SIPs paused were in equity schemes. AMFI data shows that SIP inflows through equity schemes has gradually slowed down to Rs 6,656 crore in August from Rs 6,710 crore in July and Rs 6,798 crore in June, he added.

Meanwhile, SIP inflows in debt schemes have increased recently but not enough to push the overall SIP inflows. SIP inflows in debt schemes have risen to Rs 214 crore in August from Rs 208 crore in July and Rs 193 crore in June.

Experts attribute this to the ‘flight to safety’trend, which has encouraged many investors to pull out money from their equity schemes and route it to safer short duration debt funds. G Pradeepkumar, CEO of Union AMC said, “Over the last two or three months, many investors have taken a tactical asset allocation call by moving from equity to low duration or ultra-short term funds with the objective of re-entering equity funds at lower levels in the event of a correction in the markets.”

Overall, SIP AUM increased to Rs3.36 lakh crore as on August end from Rs 3.01 lakh crore at the end of June. The rise in SIP AUM was largely due to the mark to market gains following the recent rally.